The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

	Total	Dirt Bikes	Mountain Bikes	Racing Bikes
Sales	$ 927,000	$ 266,000	$ 409,000	$ 252,000
Variable manufacturing and selling expenses	475,000	114,000	210,000	151,000
Contribution margin	452,000	152,000	199,000	101,000
Fixed expenses:
Advertising, traceable	69,600	8,900	40,400	20,300
Depreciation of special equipment	43,900	20,300	7,700	15,900
Salaries of product-line managers	113,500	40,200	38,200	35,100
Allocated common fixed expenses*	185,400	53,200	81,800	50,400
Total fixed expenses	412,400	122,600	168,100	121,700
Net operating income (loss)	$ 39,600	$ 29,400	$ 30,900	$ (20,700)

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Required:

1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

2. Should the production and sale of racing bikes be discontinued?

3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.